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आयकर अपील य अ
धकरण, ’सी’ यायपीठ, चेनई
IN THE INCOME TAX APPELLATE TRIBUNAL
‘ C’ BENCH : CHENNAI

ी अाहम पी. जॉज,लेखा सदय एवं
ीजी. पवन कुमार, यायकसदयकेसम

BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER

AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER

आयकर अपील सं./I.T.A. No. 1120/Mds/2016.

नधारण वष /Assessment year : 2011-2012.

The Income Tax Officer, Vs. Smt. R. Aishwarya,

Non Corporate Ward 3(1) No.18, Raghave Veera Avenue,
Chennai Poes Garden,
Chennai 600 086.

[PAN AEVPA2044K]
(अपीलाथ/Appellant) (यथ/Respondent)

अपीलाथ" क# ओर से/ Appellant by : Shri. A.V. Sreekanth, IRS, JCIT.

%&यथ" क# ओर से /Respondent by : Shri. M. Karunakaran, Advocate

सन
ु वाई क# तार)ख/Date of Hearing : 21-12-2016
घोषणा क# तार)ख /Date of Pronouncement : 06-01-2017

आदे श / O R D E R

PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:

Revenue in this appeal is aggrieved on the direction of the

ld. Commissioner of Income Tax (Appeals) to allow credit of

=63,98,540/- as a part of cost of acquisition/improvement for

calculating capital gains.

 :- 2 -: ITA No. 1120/Mds/2016.

2. Facts apropos are that assessee had filed a return of income

disclosing an income of =3,78,769/-. Assessee had sold a property on

04.03.2011 for a sum of =3,20,00,000/-. The said property was

purchased on 01.02.2006. Assessee computed long term capital gain

arising from the above transaction as under:-

Sale consideration : =3,20,00,000/-

Less:
Purchase Value =1,48,00,000/-
Stamp duty = 11,84,000/-
Reg. Charges = 1,48,100/-
-------------------
=1,61,32,100/-

Cost of improvement = 15,00,000/-

-----------------
=1,76,32,100/-

Indexed cost of acquisition : =2,52,24,191/-

Interest on housing loan : = 63,98,540/-

---------------------

Long term capital gain : = 3,77,269/-

----------------------

Ld. Assessing Officer was of the opinion that interest of =63,98,540/-

on the housing loan paid by the assessee, for the period starting from

the date of purchase and ending on the date of sale of property could

not be allowed as cost of acquisition/improvement. As per ld.

Assessing Officer interest expenditure incurred during the period of

 :- 3 -: ITA No. 1120/Mds/2016.

construction alone could be considered as part of cost. According to

him, thereafter it took the character of revenue expenditure. Though,

the assessee relied on the decision of Co-ordinate Bench in the case of

ACIT vs. C. Ramabrahmam (2013) 57 SOT 0130, ld. Assessing Officer

did not accept the claim of the assessee. He reworked the capital gain

excluding the interest on housing loan from the cost of acquisition/

cost of improvement.

3. Assessee moved in appeal before ld. Commissioner of

Income Tax (Appeals). Reliance was once again placed on the

decision of Co-ordinate Bench in the case of C. Ramabrahmam (supra).

The ld. Commissioner of Income Tax (Appeals) held as under at para 7

of his order:-

‘’From the perusal of the written submissions of the

appellant, it is noticed that she has heavily relied on the
decision of the Honourable jurisdictional ITAT in the
case of ACIT vs C. Ramabrahmam (2012) 27 Taxman.
Com 104 to substantiate her claim. In this case, the
Honourable ITAT has held that such interest paid on
the housing loan can be
included while computing capital gains. In fact, in the
said case, the taxpayer had claimed the interest as
deduction, in that year's when the asset was held by
the taxpayer and still the Honourable Tribunal held that
the interest can be claimed as cost of
acquisition, on the reasoning that both are under
different heads of income. However, as contended, in
the present appellant's case, she had not claimed the
interest as deduction, in the years when the asset was
held by her. As such, it was pleaded that the
possibility of any double deduction on this score did not
 :- 4 -: ITA No. 1120/Mds/2016.

arise at all. I find force in the above submissions of the

appellant and the case law relied upon by. It is rightly
held that the deduction u/s 24(b) and computation of
capital gains under section 48 are covered by different
heads of income, i.e., income from House Property and
Capital Gains. Both of the provisions do not exclude
the other. Deduction u/s 24(b) is claimed when
concerned assessee declares income from House
Property, whereas, the cost of the same asset is taken
into consideration when it is sold and capital gains are
computed under section 48. The interest paid on the
loan taken for acquiring the asset is an expenditure in
acquiring the asset. Since both the provisions are
altogether different, I am of the considered view that
the appellant is entitled to include the interest amount
at the time of computing capital gains under section 48
of the Act. In the light of this
observation, the AO is directed to allow the credit of
Rs.63, 98, 540/-as cost of acquisition while calculating
the capital gains. In the result, the appeal of the
assessee is allowed in its favour.

4. Now before us, the ld. Departmental Representative

submitted that the Department had not accepted the decision of Co-

ordinate Bench in the case of C. Ramabrahmam (supra).

5. Per contra, ld. Authorised Representative strongly

supported the order of the ld. Commissioner of Income Tax (Appeals).

6. We have perused the orders and heard the rival contentions.

The Co-ordinate Bench in the case of C. Ramabrahmam (supra) had

held as under at para 8 of its order:-

8. We have considered submissions of both parties at length and also

perused the relevant findings of the Assessing Officer as well as
 :- 5 -: ITA No. 1120/Mds/2016.

CIT(A). Regarding the issue of capital gains, it transpires that there is

hardly any dispute that the assessee had availed the loan for
purchasing the property in question. Since the assessee had shown the
income under the head ‘house property’, he preferred to raise the
claim of deduction under section 24(b) of the “Act”, which reads as
under:

“(b) where the property has been acquired, constructed,

repaired, renewed or reconstructed with borrowed capital, the
amount of any interest payable on such capital:”

There is no quarrel that since the assessee’s claim of deduction was

under the statutory provisions; therefore, he succeeded in getting the
same. However, after the property was sold, he also chose to include
the interest amount while computing capital gains under section 48 of
the “Act”, which reads as under:

“48. The income chargeable under the head “Capital gains”

shall be computed, by deducting from the full value of the
consideration43 received or accruing as a result of the transfer
of the capital asset the following amounts, namely :—
(i) expenditure incurred wholly and exclusively in
connection with such transfer;
(ii) the cost of acquisition of the asset and the cost of any
improvement thereto:”

After perusing the above said provisions, we are of the opinion that
deduction under section 24(b) and computation of capital gains under
section 48 of the “Act” are altogether covered by different heads of
income i.e., income from ‘house property’ and ‘capital gains’. Further,
a perusal of both the provisions makes it unambiguous that none of
them excludes operation of the other. In other words, a deduction under
section 24(b) is claimed when concerned assessee declares income
from ‘house property’, whereas, the cost of the same asset is taken into
consideration when it is sold and capital gains are computed under
section 48. We do not have even a slightest doubt that the interest in
question is indeed an expenditure in acquiring the asset. Since both
provisions are altogether different, the assessee in the instant case is
certainly entitled to include the interest amount at the time of
computing capital gains under section 48 of the “Act”. Therefore, the
CIT(A) has rightly accepted the assessee’s contention and deleted the
addition made by the Assessing officer. Hence, qua this ground, we
uphold the order of the CIT(A)’’.
 :- 6 -: ITA No. 1120/Mds/2016.

Co-ordinate Bench has clearly held that an assessee is entitled to

include interest in the capital cost while computing capital gains u/s.48

of the Act. Judicial discipline requires us to follow the order of a co-

ordinate Bench unless it could be demonstrated that the view taken

was contrary to a provision of law. The ld. Commissioner of Income

Tax (Appeals) in the case before us had followed the decision of Co-

ordinate Bench. We cannot therefore interfere with the order of the

ld. Commissioner of Income Tax (Appeals).

7. In the result, the appeal of the Revenue stands dismissed.

Order pronounced on Friday, the 6th day of January, 2017, at Chennai.

Sd/- Sd/-
(जी. पवन कुमार) (अाहम पी. जॉज)
(G. PAVAN KUMAR) (ABRAHAM P. GEORGE)
या$यक सद%य/JUDICIAL MEMBER लेखा सद%य/ACCOUNTANT MEMBER

चेनई/Chennai
-दनांक/Dated: 06 January, 2017.
KV
आदे श क# %त/ल0प अ1े0षत/Copy to:
1. अपीलाथ"/Appellant 3. आयकर आयु2त (अपील)/CIT(A) 5. 0वभागीय %तन7ध/DR
2. %&यथ"/Respondent 4. आयकर आयु2त/CIT 6. गाड फाईल/GF